St. Michelle keys Railex expansion

Wallula  Railex LLC, the transcontinental produce train, is making tracks on a major expansion in the wine industry.

The company is partnering with Woodinville's Ste. Michelle Wine Estates for the first temperature-controlled rail-based system designed to transport wine across the U.S, officials announced today.

The cornerstone: A new $18 million to $20 million distribution center adjacent to Railex's existing center in Wallula. The 500,000-square-foot bonded wine storage and distribution center is scheduled for opening next February.

The Railex Wine Services Distribution Center will offer refrigerated, humidity-controlled storage plus efficiencies to manage inventory and transportation logistics, according to the announcement.

The new development will allow Ste. Michelle, known for its vast portfolio including Chateau Ste. Michelle, Columbia Crest, Northsar and Spring Valley Vineyards among many others, to focus on what it does best, said Rob McKinney, vice president of operations for the wine company whose roots go back almost 80 years.

"Ste. Michelle is an expert at growing grapes and making wine," McKinney said in a statement. "Although we have expertise with transportation and distribution issues, we determined that our business has grown to a scale that requires a third-party logistics provider to manage our distribution requirements according to our exacting standards."

Railex already operates three distribution facilities linked by refrigerated perishable unit train -- the first of its kind to be marketed to the food and beverage industry, officials say.

From the hub in Wallula, bottles will be shipped from wine country to retailers nationwide. They can also be imported from an Eastern port to the warehouse in Wallula.

"Our location in the heart of Washington wine country, the latest inventory control and warehouse management technologies and high-speed refrigerated rail transportation will enable us to deliver wine quickly while maintaining the highest standards of quality," said Jim Kleist, senior vice president of Railex's West Coast operations in Wallula.

Railex's system guarantees five-day transit from both Wallula and the company's warehouses in Delano, Calif., and Rotterdam, N.Y. A fourth location is slated for the southeastern part of the country in 2013. In early May, Kleist said the company had been scouting Florida for its next hub.

The new investment in Wallula is expected to bring an additional 25 jobs to the complex, an official said.

Railex was allocated $2.75 million in the state capital budget for the expansion.

In another step in the project Port of Walla Walla commissioners planned to vote on lease and purchase agreements with Railex during a special 4 p.m. meeting today at the Port office, 310 A St.

Port officials expect to enter into a lease with Railex for 30 acres of property at the Port's Dodd Road Business Park. The Port also plans to enter concurrently into a "letter of agreement" to sell the land to Railex.

The lease agreement will allow Railex access to the property to begin construction while terms of the eventual land acquisition are completed.

"Railex has a proven business model for storing and shipping Pacific Northwest produce to East Coast markets by rail," said Port President Paul Schneidmiller in the announcement. "Ste. Michelle is the premier Pacific Northwest winery and its wine storage and distribution services make for a great partnership with Railex."

The Port is expected to invest about $300,000 for an access road and improvements for the project, expected to increase the tax base for the county.

The New York company has shown several signs of its pending expansion. In April the company announced plans to increase its weekly service platform to accommodate its steady annual growth of 30 to 40 percent over the last five years.

"With fuel prices increasing on a steady basis this year and talk of over $5 a gallon this summer, we felt it was important to increase our weekly frequency as soon as possible," said Pat Bruno, senior vice president of sales and marketing, in that announcement.

Since its opening in 2006, Railex has transported 30,434 rail cars coast-to-coast, saved nearly 300 million long-haul freight miles, taken 105,623 trucks off the road and decreased diesel fuel consumption by more than 45 million gallons, according to data gleaned by the company in conjunction with the U.S. Environmental Protection Agency.